Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - EL PASO ELECTRIC CO /TX/ | d8k.htm |
| EX-99.01 - PRESS RELEASE - EL PASO ELECTRIC CO /TX/ | dex9901.htm |
 El Paso Electric Company
4th Quarter 2010 Earnings Conference Call
4th Quarter 2010 Earnings Conference Call
February 22, 2011
February 22, 2011
Exhibit 99.02 |
 El Paso Electric
R
February 22, 2011
Investor Relations
2
Statements in this presentation, other than statements of historical information,
are forward-looking statements that are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995 (the
“act”). Such statements are intended to be made as of the date of
this presentation, and the company does not undertake to update any such
forward-looking statement. Forward-looking statements involve known and
unknown
risks
and
other
factors
that
may
cause
actual
results
to
differ
materially
from
those
expressed
in
this
presentation. In connection with the safe-harbor provisions of the act,
the company has set forth below a number of important risks and factors
that could cause actual results to differ materially from forward-looking information.
Factors that could cause or contribute to such differences include, but are not
limited to: Increased prices for fuel and purchased power and the
possibility that regulators may not permit El Paso Electric (EE) to pass
through all such increased costs to customers or to recover previously incurred fuel
costs in rates
The ability to recover capital investments and operating costs through rates in
Texas and New Mexico Uncertainties and instability in the general economy
and the resulting impact on EE’s sales and profitability Unanticipated
increased costs associated with scheduled and unscheduled outages The
size
of
our
construction
program
and
our
ability
to
complete
construction
on
budget
and
on
time
The costs at Palo Verde (PV)
Deregulation and competition in the electric utility industry
Possible increased costs of compliance with environmental or other laws,
regulations and policies Possible income tax and interest payments as a
result of audit adjustments proposed by the IRS Uncertainties and
instability in the financial markets and the resulting impact on EE’s ability to access the
capital and credit markets
Other factors detailed by EE in its public filings with the Securities and
Exchange Commission. Please refer to EE’s 2009 Form 10K and
other 1934 Act Filings Safe Harbor Statement |
 El Paso Electric
R
February 22, 2011
Investor Relations
3
Solid 4
th
quarter and strong YTD earnings results due to increased
retail kWh sales growth, improved economic conditions, favorable
weather, and rate increases which were necessary to allow us to
begin recovering capital investments we have made in the last
several years to meet customer growth
–
2.0 percent increase in retail kWh sales in 4th quarter
–
4.4 percent increase in retail kWh sales in 2010
During the 4th quarter of 2010, EE repurchased approximately
134,000 shares at a total cost of $3.5mm
PV Unit 3 planned refueling/maintenance
outage completed in 39
days
Highlights for the 4th Quarter 2010 –
David Stevens |
 El Paso Electric
R
February 22, 2011
Investor Relations
4
EE stock was the best performing investor-owned utility stock in 2010 with a
total return of 36 percent
Earnings
per
share
increased
by
approximately
39
percent
in
2010
when
compared
to 2009
EE
satisfactorily
settled
the
first
Texas
Rate
Case
in
more
than
15
years
providing
clarity for shareholders and removing regulatory uncertainty
EE implemented new rates in its New Mexico service territory
During 2010, EE repurchased approximately 1.5mm shares at a total cost of
$33.7mm, including commissions
EE issued $110 million of private placement senior notes at an average rate of 4.6
percent and with an average tenor of 8 years to finance nuclear fuel
On September 23, 2010, EE completed the refinancing of the $200 million revolving
credit facility with a four-year term and an option to increase the
size to $300 million Significantly enhanced the level of available liquidity
for the Company from $185mm at December 31, 2009 to $275mm at December 31,
2010 2010 Accomplishments -
Financial |
 El Paso Electric
R
February 22, 2011
Investor Relations
5
EE attained a record native system peak of 1,616 MW on August 23,
2010 and surpassed the 2009 native system peak of 1,571 MW set
on July 15, 2009
EE and the IBEW Local 960 successfully negotiated a new 3-year
agreement
EE completed the Customer Care & Billing System installation on
time and under-budget
2010 Accomplishments -
Operating |
 El Paso Electric
R
February 22, 2011
Investor Relations
6
In
2010,
PV
produced
more
than
31
million
MWh’s
and
attained
a
capacity factor of 90.4 percent
–
All three PV units achieved 100 days of continuous run operation
during
the summer months of 2010
PV Unit 3 planned refueling/maintenance outage began on October
2, 2010 and was completed on November 10, 2010 (39 days)
PV Unit 2 planned refueling/maintenance outage scheduled for April
2011
NRC is currently reviewing the 20 year license extension application
that was filed in December 2008
–
Anticipate
obtaining
final
approval
in
the
2
nd
Quarter
of
2011
Palo Verde Update |
 El Paso Electric
R
February 22, 2011
Investor Relations
7
Anticipate completion of Phase II of Newman 5 before summer 2011
–
Project is on track and remains under-budget
Obtain regulatory approval in 2011 for 87MW aero derivative
peaking unit at the Rio Grande site; on-line date of 2013
No rate cases are anticipated for 2011 at this time in either Texas or
New Mexico
2011 Initiatives |
 El Paso Electric
R
February 22, 2011
Investor Relations
8
4th
Quarter
2010
(Basic)
EPS
-
$0.18,
compared
to
4th
Quarter
2009 (Basic) EPS of $0.18
YTD
2010
GAAP
(Basic)
EPS
-
$2.32
after
extraordinary
item
YTD
2010
GAAP
(Basic)
EPS
-
$2.08
before
extraordinary
item,
compared to YTD 2009 (Basic) EPS of $1.50
4th Quarter and YTD 2010 Financial
Results –
David Carpenter |
 El Paso Electric
R
February 22, 2011
Investor Relations
9
Retail non-fuel base revenues increased by $5.2mm pre-tax or $0.08 per
share due to new non-fuel base rates in NM and TX and a 2.0 percent
increase in kWh sales as a result of an expanding customer base
AFUDC and capitalized interest increased by $3.0mm pre-tax or $0.06 per
share in 2010 due to higher balances of construction work in progress
PV operations and maintenance costs declined by $3.5mm and contributed
$0.05 per share due to a reduction in maintenance costs and reduced
property insurance and benefit expenses
Offsets to the above amounts include:
–
Decreased investment and interest income due to realized gains on sales
of investments in our PV decommissioning trust in 2009 ($0.04)
–
Lower off-system sales margins due to increased sharing ($0.04)
–
Higher revenue related and property taxes ($0.03)
–
Higher depreciation expense, increased customer accounts and service,
and decreased PV3 revenues due to the planned outage ($0.06)
4th Quarter 2010 Financial Results -
Key Drivers |
 El Paso Electric
R
February 22, 2011
Investor Relations
10
Retail non-fuel base revenues increased $53.0mm pre-tax or $0.77 per share
due to new rates in NM and TX and a 4.4 percent increase in kWh sales
AFUDC and capitalized interest increased by $3.7mm pre-tax or $0.07 per share
due to higher balances of construction work in progress
PV operations and maintenance costs declined by $4.4mm or $0.06 per share due to
decreased maintenance costs at units 2 & 3 during scheduled refueling
outages Deregulated PV3 revenues increased by $2.0mm pre-tax or $0.03
per share due to increased PV3 generation and higher proxy prices in
2010 Offsets to the above amounts include:
–
Increased income tax expense due to the elimination of the Medicare Part D
subsidy ($0.11)
–
Higher depreciation expense due to higher plant balances ($0.09)
–
Increased administrative and general expense primarily due to higher pension
costs related to revised actuarial assumptions ($0.08)
–
Lower retained off-system sales margins due to increased sharing ($0.08)
YTD 2010 Financial Results –
Key
Drivers |
 El Paso Electric
R
February 22, 2011
Investor Relations
11
MWh’s by Class –
4th Quarter & YTD
2010
MWh Sales by Class
Q4
%
Change
YTD
%
Change
Residential
550,164
5.0%
2,508,834
6.2%
C&I Small
533,313
1.6%
2,295,537
2.0%
C&I Large
260,860
-2.6%
1,087,413
6.2%
Other Public
362,167
1.9%
1,542,389
4.0%
Total Retail Sales
1,706,504
2.0%
7,434,173
4.4%
Heating Degree Days
795
-22.8%
2,273
6.0%
Cooling Degree Days
131
12.0%
2,738
-1.1%
Average Number of Retail Customers
375,317
1.6%
373,155
1.7%
Year-end Retail Customers
376,822
1.9%
376,822
1.9% |
 El Paso Electric
R
February 22, 2011
Investor Relations
12
2011 Earnings Guidance range of $2.00 to $2.40 per basic share
2011 Earnings Guidance |
 El Paso Electric
R
February 22, 2011
Investor Relations
13
Capital Expenditures
Primary additions to rate base
through 2014 include:
–
Completion of generation plant
additions
–
T&D construction necessary to meet
customer growth
Construction work in progress of
$285mm at December 31, 2010
Capital Expenditures are expected
to average approximately $209mm
annually through 2014
(1) Does not include acquisition costs for nuclear fuel
(2) Includes $289mm for new generating capacity of which $19mm is allocated
for the completion of Newman 5, $73mm for an 87 MW peaking unit
at the Rio Grande Station, $174mm for a new 288 MW combined
cycle unit, $11mm for anticipated renewable projects, and $12mm for other
generation projects |
 El Paso Electric
R
February 22, 2011
Investor Relations
14
2010 Liquidity
Sufficient Cash Flow to Fund Capital Expenditures
Anticipate having adequate liquidity to fund capital expenditures
through 2011 without having to access capital markets
|
 El Paso Electric
R
February 22, 2011
Investor Relations
15
During 2010, EE repurchased 1.5mm shares at a total cost of $33.7mm
During the 4th Quarter of 2010, EE repurchased approximately 134,000
shares at a total cost of $3.5mm
Since the beginning of the repurchase program in 1999, annual stock
repurchases have averaged 3.55% of outstanding shares
Approximately 676,000 shares remain available for repurchase under
current authorization
Criteria for share repurchases:
–
Adequate liquidity to fund capital expenditures
–
Appropriate equity ratio for financial and regulatory purposes
–
Cash performance consistent with or better than planned
Share Repurchase Program |
 February 22, 2011
Investor Relations
16
Questions and Answers |